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Mike Gorun

Mike Gorun Managing Partner/CEO

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Is Digital Retailing Really a Good Thing for Dealers?

The buzz today among vendors in the automotive industry is all about making the car buying transaction faster and more convenient for the consumer. I get it. Consumers think it takes too long to buy a car, so technology companies are inventing ways to trim down that transaction time. Sure, it may make car buying an easier and more convenient experience for consumers which, the hope is, will make consumers buy more cars. But, while that might be true, what are the side effects?

Now, if you want to talk about the power of convenience, look at Amazon. Speed and convenience are after all, the keys to their success. If Amazon had its way, it would simply teleport whatever a customer wants to them instantly. They can’t (and they don’t) but they’re very good at getting things to customers quickly – sometimes within hours.

However, when it comes to automobile purchases the real prize dealerships should be trying to win isn’t a quick “sale,” but rather a customer for life. If you take the human interaction and relationship building opportunity out of the consumer car buying transaction, when will dealers have the chance to START a relationship, much less BUILD one?

I understand that making the car buying process faster, easier and more pleasant is appealing. But consider the ramifications of essentially sterilizing the car buying process. What will this mean for future business from your customers in both sales and service?

While everyone is talking about how the auto industry should look to Amazon and create that “Amazon experience,” in my opinion, it’s not so much that consumers are loyal to Amazon. Perhaps the reason there are so many Amazon-loyalists and Prime members is because Amazon customers are, in fact, loyal to convenience. If Amazon stopped being convenient, customers would leave and find a retailer that is.

Don’t misunderstand me, I certainly believe that using technology to expedite the car buying transaction is wise. Consumers want fast and furious (for the most part). What I’m saying is that it is important to keep those points of in-person human contact during the transaction, so you can bond and create a relationship with each customer.

When a customer needs laundry detergent, they buy it. They don’t necessarily care from where. In fact, they may even buy Tide from Amazon and skip the grocery store altogether. No relationship will ever be built between the consumer and “whatever random place the consumer chooses to buy Tide from when they need it.”

I’m certainly not trying to be all doom-and-gloom for technology companies in the automotive industry that are working to create a faster, better transaction. All I’m saying is that we – as an industry – need to consider how to make the customer experience better while still retaining enough opportunities to build relationships. In the end, that’s the only way we can earn and keep a customer’s loyalty.

Patrick Bergemann

"Amazon customers are, in fact, loyal to convenience. If Amazon stopped being convenient, customers would leave and find a retailer that is."

I love this point and that's coming from a guy whose company just made a whole video series on how Amazon has changed consumer culture. That being said, I think we're on the same page with "selling cars like Amazon".

People are taking it literally and opposing online auto-retailing saying "there are things you can't do online that make it impossible to sell without being in person" or "it's impossible to be frictionless". Yes. There's a test drive. There's time looking at a trade. There's verification that all the forms filled out online actually represent the person who is walking in to pick up the car. But really...those are the online make-or-break factors. If we made an online tool (like Virtual Deal or a concierge service), we could lower the time spent in a dealership. I think that's the definition of convenience.

Is that going to make an individual dealer a success? Maybe locally and in the short-term. Eventually other dealers will catch up. BUT pair the convenience with effective branding and awareness of YOUR customers and YOUR community....that's a winning long-term formula.

Great thoughts, Mike.

Therese Aleman

Totally agree with you Mike. This is still very much a relationship business and digital retailing won't change that...it's just changing the way we connect with shoppers.  We recently did some research and no surprise, consumers like the idea of completing paperwork online, but they also said they value the dealers' expertise when they're ready to buy.  We believe there needs to be a "tango," so to speak, of dealership sales and guided shopping through chat, text and co-browsing until shoppers are ready to visit the dealership.  If we look at connection opportunities throughout the whole shopping experience, digital retailing can give consumers and dealerships the chance to have more conversations and more relationship-building.

Daryl Sanders

Good stuff Mike.  The car business is above all a "people" business.  Listen to what the data tells us.  Only 30% to around 40% are repeat brand buyers.  Of those, only 1/2 of them buy from the same dealer. Dealers naively claim their DMS belongs to them!  Nice try.  The answer? Develop personal relationships.  The car dealer going forward must discover how to become "MY CAR DEALER!"

Mike Gorun

Thank you everyone for the comments. While it's OK to strive to improve the buying experience through technology, I think losing the "human touch" in the transaction will hurt dealers more than speeding up the process will help them.

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